If there's one very, very good reason that you should stop worrying and learn to love economic depressions, then it's this: that recession, or depression, is an important part of every central-bank created economic cycle -- and it's the bit after all the expensive mistakes when everything is made right again.
If the "boom" is the part where the central bank's rocket fuel sends everyone out on a bender, and the "crisis" is the part when you wake up in the morning and realise you've left your credit card with the hooker and her six cocaine-addled friends, then the "depression" is the part where you ring the credit card company and cancel the card. The depression is the recovery phase.
It's the period when businessmen realise they've been swimming in the central bank's inflated money, and they and everyone else are about to drown in it.
Things were going seriously awry, and now we've found out! That's a good thing!
People were swimming naked, to use Warren Buffet's phrase, and now that the tide's out, the chickens have come home to roost, and all our metaphors are mixed, we can all see for ourselves who's out there with no clothes on, and where the chickens are roosting.
What's urgently needed now is not to keep on swimming in all that rocket fuel, but to let those who have been go to the wall, without setting a match to all those who haven't.
Explains Murray Rothbard in America's Great Depression (which you can, and should, read online here in PDF),
The "boom" ... is actually a period of wasteful misinvestment. It is the time when errors are made, due to bank credit's tampering with the free market. The "crisis" arrives when the consumers come to reestablish their desired proportions. The "depression" is actually the process by which the economy adjusts to the wastes and errors of the boom, and reestablishes efficient service of consumer desires.
The "depression" is a necessary thing.
The adjustment process consists in rapid liquidation of the wasteful investments. Some of these will be abandoned altogether (like the Western ghost towns constructed in the boom of 1816–1818 and deserted during the Panic of 1819); others will be shifted to other uses.
Always the principle will be not to mourn past errors, but to make most efficient use of the existing stock of capital. In sum, the free market tends to satisfy voluntarily-expressed consumer desires with maximum efficiency, and this includes the public's relative desires for present and future consumption. The inflationary boom hobbles this efficiency, and distorts the structure of production, which no longer serves consumers properly.
The crisis signals the end of this inflationary distortion, and the depression is the process by which the economy returns to the efficient service of consumers.
In short, and this is a highly important point to grasp, the depression is the "recovery" process, and the end of the depression heralds the return to normal, and to optimum efficiency. The depression, then, far from being an evil scourge, is the necessary and beneficial return of the economy to normal after the distortions imposed by the boom. The boom, then, requires a "bust."
Time to stop worrying then, and learn to love the recovery.
But wait, there's more. There are those who hate recovery. There are those like the crisis. There are three groups all set to capitalise, and three major reasons not to love economic depressions.
1) Because politicians and other anti-capitalists nitwits use economic depressions to kill or further hamper free markets.
2) Because politicians and other anti-capitalists nitwits have already put in place handbrakes on recovery like minimum wage laws and meddling regulations on every business who's now vigorously trying to cut costs, and they're never ever going to remove them. It's hard to recover fast when you're driving with a handbrake on.
3) And because if we don't make sure they stop it, politicians are going to keep trying to bail out failed bankers, and failed bankers are going to keep letting them, and you and I and the remaining businesses still making money are going to be made to pick up the tab, and keep on picking up the tab, until there's no one left who's able to pay. And then there'll be no chance of recovery at all.